Sunday, December 16, 2018

California renters still want to own a home: four out of five renters state they want to own a home some day, and this is in spite of affordability challenges.

Some of the statistics indicate that nearly half of renters say they would purchase a home if they got a new job, a raise, or a promotion, while another 40 % say they would be motivated to buy a home if they got married or were starting a family.

Wednesday, December 12, 2018

Non-homeowners in SF could spend $2.5 million in rent by age 60

A new report finds that those who put their money into rent rather than home equity blow an

estimated $2.5 million between the ages of 25 and 60.

The study by the personal finance site Go Banking Rates (see the article by Gabriele Olya - June 6, 2018) looked at how much someone who starts paying rent at 25 would spend by ages 30, 40, 50 and 60 in America's 25 most populous cities.

I like to put things in perspective: in real life most people would move at some point or other, relocate, change jobs or change their family situation.

Purchasing a home is not always the best option: it depends on many factors - job stability, savings, goals in life, priorities, family situations etc... Still, the information is an important part of the equation when considering a home purchase.
.... As is the current home ownership rate in the US: 64.4%.

Any question regarding a real estate purchase or sale? Or trying to understand the parameters? Let me know!
Thanks for reading,

Thursday, December 6, 2018

One may think that Title Insurance is an unnecessary cost in a real estate transaction. After all, what can go wrong if you have excellent sellers' disclosures, and all looks so good and simple?

Title Insurance is mandated by the bank when one has to finance the purchase. But it is not mandated when one buys cash: in that case, it is up to the buyer to request Title Insurance.

There are many reasons why it is not a great idea to purchase without Title Insurance, and they are well summarized in this post from Cornerstone Title insurance.

Getting Title Insurance is the only way you can have some vision on the history of the property, and whether or not it has liens or encumbrances. I also personally think it is a good idea (i.e. a very good idea) to talk to the Title company and ask questions about the preliminary title report and what it means exactly, when you are in contract to purchase a property.

Sunday, November 4, 2018

It's hard to believe but interest rates are not that high, when you look at them with a 10 or 20-year perspective..

Click on picture to see a larger version.

Of course, we are now used to paying little when we take on a mortgage, and who did not refinance in the past 8 years? So it looks expensive now to consider a new mortgage - but 10 years ago we were looking at around 6%.
We all hope we don't go back there...

Still, a majority of renters say they want to buy, according to a survey by the National Association of Realtors (NAR).

Friday, October 26, 2018

Americans are beginning to shift their investments to other areas as real
estate fell not one but two spots from being the top investment choice back in
2016.

Americans across all ages said that real estate is their third pick for the
investment of money they won’t need for more than 10 years, according to a survey
by Bankrate.

The survey showed 32 percent of American prefer to invest in stocks, followed
by 24 percent percent who say cash investments is best and 22 percent in real
estate. This is down from 2016, when real estate was the No. 1 choice.
In fact, Bankrate explained that this is the first time in four years that
respondents didn’t favor real estate as their top choice.
“For investment horizons of longer than 10 years, the stock market is an
entirely appropriate investment,” Bankrate Chief Financial Analyst Greg McBride
said. “Cash is not, and especially if you’re not seeking out the most
competitive returns.”The majority of Americans actually favor investing in the stock market,
including 33 percent of Gen Xers, 38 percent of Baby Boomers and 44 percent of
the Silent Generation, however Millennials favored cash investments. The survey
showed 30 percent of Millennials said cash is their favorite long-term
investment.

My concern: have people given up on their homeownership dreams? I am not sure this is the case. But the article was written in July of 2018, and the stock market was very high, and had been going up consistently. We can safely assume this is not always going to be the case in the future, which may in turn change those stats.

Monday, October 8, 2018

Here are some interesting statistics, from the California Association of Realtors.

The Take-Away: buyers should have chosen their loan, and their lender before starting their home search, as it is an important part of the decisions they have to make relative to the whole process. Their search will depend in part on what they find out with their lender.

Friday, September 28, 2018

I read this interesting article (with interactive map) on the KQED news website about the downpayments made for california purchases made with an FHA loan. Granted, not all loans are FHA in California, especially in our local counties of Santa Clara and San Mateo. But for most of the rest of California, it is interesting to see that parents help with the downpayment of their kids' purchase.

The California Dream series is a statewide media collaboration of CALmatters, KPBS, KPCC, KQED and Capital Public Radio with support from the Corporation for Public Broadcasting, the James Irvine Foundation and the College Futures Foundation.

KPCC crunched the numbers on more than 600,000 FHA
loans, a type of government-backed mortgage that's common with first-time
buyers.FHA borrowers can use money from relatives for their down payment.
In recent years, that kind of family financial help has been on the rise
in California.

Back in 2011, about one in four FHA loans in California
included down payment money from relatives. Today, it's one in three.

Family down payment support is playing an even bigger
role in many parts of California, outstripping the national rate of 26
percent. Last year, in dozens of California ZIP codes — covering parts of
East San Jose, North Hollywood, South Central Los Angeles, Santa Ana and
Alpine in eastern San Diego County — at least half of FHA borrowers were
getting family members to help with the down payment.

Parents are not just gifting down payments to their
kids. They're also co-buying houses.A recent quarterly report

from
Irvine-based real estate data firm Attom Data Solutions found that 48
percent of houses purchased in San Jose had sales deeds that listed
multiple non-married buyers (often an indication that parents are
co-buying with their children). The same was true for 38 percent of homes
purchased in San Francisco.

Friday, September 21, 2018

Even though the old timer always said: "the land, son, it's the land that matters", nowadays a lot of real estate is in the form of condominiums and townhomes. In fact in recent years, nationally, the appreciation is actually higher for condos and townhomes than for traditional houses, called SFR (single family residences), a term which implies that there is a piece of land that comes with it. The reason is because since they were cheaper to start with, and they are usually "starter homes", they were more in demand because more affordable. Also, lifestyles have evolved and many more people live in cities where density is higher (hint: like in the Silicon Valley).

What do homeowners think of their HOA? The following information is provided by the California Association of Realtors.

if you are considering a purchase of a planned unit development ("PUD"), you may want to look at one of my older posts regarding condominiums in the Silicon Valley, or another one regarding the difference between condominiums and townhouses.

Thank you for reading, and share my blog if you like it!
Let me know how I can help you with your real estate needs,
Best regards,
Francis

Monday, September 17, 2018

In its continuing effort to
address California’s unprecedented housing supply crisis and eliminate the
“moving penalty” that severely restricts the ability of seniors, disabled
residents, and victims of natural disasters to relocate, C.A.R. as filed a
revised initiative with the Attorney General for preparation of title and
summary for the November 2020 ballot. The new initiative would:

Remove the “moving
penalty” for seniors 55 and older, the disabled, victims of natural
disasters, and those whose homes are located on contaminated property,
allowing them to carry their current Proposition 13-protected property tax
assessment level to another home of any price, anywhere in the state, any
number of times.

Eliminate
intergenerational transfers of primary residences and other inherited
property being used as income-producing properties without reassessment.

“Filing this new initiative will allow C.A.R. – in the event the
‘moving penalty’ is not eliminated this November – to immediately begin
gathering signatures to qualify the new initiative for the November 2020 ballot
and reinforce our commitment to making tax fairness a reality,” said C.A.R.
President Steve White. “This new initiative will provide for property tax base
portability, reform the intergenerational transfer laws, and address the true
‘split roll’ problem – corporations gaming the current property tax
reassessment system. And, most significantly, it will raise money for schools
and local governments,” stated White.

C.A.R. has already qualified an initiative for the November 2018 ballot, now
known as Proposition 5, which addresses the “moving penalty” on seniors, the
disabled, victims of natural disasters, and those whose homes are located on
contaminated property.This Initiative would help a lot the real estate shortage situation in the Silicon Valley, as it would make it easier for a lot of would-be sellers to sell and buy somewhere else in California, while keeping their property tax basis. This in turn would free up inventory and enable more would-be buyers to buy. Francis Rolland

Friday, September 14, 2018

Here is an update on my regular graphs on the seasonality of prices in the Valley. This graph shows the peaks in the County of Santa Clara (mostly = the Silicon Valley) which includes among other big city names: Santa Clara, San Jose, Sunnyvale, Cupertino, Palo Alto, - all big locations for the high tech industry.

As expected, the months of Feb to May show the highest average prices every year, followed by a (small) dip in summer, and a small bump in September-October, and again another slow-down in Nov.-Dec.. As in previous blogs, I'd like to point out that all of this is statistical, and does not necessarily mean that a given property will sell for more or less depending on the month. It does mean that over large numbers of sales, the trend exists.
The sales prices for a given month show the following month, as transactions usually take about 3-4 weeks to close.

Click on the picture to see it full size.

Thank you for reading, and as always, if you like the post, do share it ;-)

Friday, August 10, 2018

A decade after the U.S. housing market collapsed, half of
the country's homes have regained the value they lost during the recession,
according to the June Zillow Real Estate Market Report.

Nationally, the median home value is $217,300, up 8.3 percent over the
past year and 8.4 percent above the highest point of the housing bubble. The
median home value has surpassed its bubble peak level in 21 of the nation's 35
largest housing markets.

In places that have seen some of the strongest growth since the market
crashed, nearly every home is now more valuable than it was during the boom
years. However it is not the same everywhere in the Country, and this article implies that there are still about 1/2 of the homes which have not caught up yet with the pre-recession levels.

Which in my mind is a good reminder that a financial crisis leaves long-lasting scars, and that prudence should be the norm when it comes to financial markets.

Thank you for reading, and let me know when you have a real estate question or need.
Francis

Friday, August 3, 2018

Check out this interactive
map of the “Home Price Fundamentals” for California, and individual Counties.

The interactive tool is provided by the California
Association of Realtors (CAR)

Some of these graphs are most interesting, like the one
called “Years of Savings Required for Down payment”, which is now close to 20.The one called
“Price to Income Ratio” shows that it takes about 8.3 years of
paychecks to purchase the median priced home in California right now.

If you look at the County of Santa Clara though, the figures
are staggering: it takes over 11 years of salary to afford the median priced
home, and it takes over 26 years of savings (at 6% of savings rate) to afford
the typical 20% down payment.

It also shows that in California, if you are in the median, it takes about 59% of the
yearly income to pay for your mortgage...

Thursday, July 5, 2018

From the California Association of Realtors, and Realtor.com:
these are the attributes most likely to be seeked by homebuyers:

Another thing that I would definitely add to this picture is, for buyers 55+ and older:
- a one-level property with no stairs.
... and in general, my experience is that would-be home buyers are more attracted by homes with a lot of natural light and an open floor plan, and will sacrifice other features in order to get that.

Tuesday, June 19, 2018

US house prices are going
to rise at twice the speed of inflation and pay: Reuters poll
Source: CNBC Article

An acute shortage of affordable homes in the United States will continue over
the coming year, according to a majority of property market analysts polled by
Reuters, driving prices up faster than inflation and wage growth.

The latest poll of nearly 45 analysts taken May 16-June 5 showed the
S&P/Case Shiller composite index of home prices in 20 cities is expected to
gain a further 5.7 percent this year.
That compared to predictions for average earnings growth of 2.8 percent and
inflation of 2.5 percent 2018, according to a separate Reuters poll of
economists.

U.S. house prices are then forecast to rise 4.3 percent next year and 3.6
percent in 2020.

A further breakdown of the April data showed the inventory of existing homes
had declined for 35 straight months on an annual basis while the median house
price was up for a 74th consecutive month.

About 80 percent of nearly 40 analysts who answered an extra question said the
already tight supply of affordable homes in the United States will either stay
the same or fall over the next 12 months.In the Bay Area, things are not better. The ratio of home completions to job growth is still very small, which will keep pressure on home prices here too:

.. while according to this article from the Mercury News, the nation's top three most expensive places for renters are here in the Bay Area...Thank you for reading,

Tuesday, June 5, 2018

According to a new report by Veritas Urbis Economics, the landscape of buyers is changing in surprising ways as compared to 35 years ago.

According to this Housing Wire article by Kelsey Ramirez:- the share of women as buyers has increased from 18.9% in 1981 to 46.4% in 2017,
- single women homebuyers make up 18.9% of all buyers, when it was just 9.1% in 1981,
- the share of households over 55 increased to 27.8% in 2017 (it was 16.1% in 1981),
- homebuyers under 35 made up 52% of all buyers in 1981, they are now under 34%.

How does it play out in the Bay Area of San Francisco, the Silicon Valley?
I don't think we fall within those stats very well when it comes to age. In my (limited) experience, in the local market, there are quite a few younger households among the buyers, and as far as households over 55, they make up a lot of the sellers, not buyers: as people age, they are likely to sell their home at some point, and in that case they most often leave the area. Typically this demographic segment does not buy in the Valley as prices and property taxes are too high for the retired population. Although we do have a portion of the elderly buyers who are moving down, after selling a property that has become too large or far away for them.

Thursday, May 24, 2018

Yes indeed, who is buying homes nowadays in the U.S.?
This little graph summarizes well some interesting statistics, like for instance the fact that more single women buy a place than young single men, but still 65% of all buyers were married couples.
With regards to women buying a home alone, this article (for the Realtor Magazine) also indicates that in some areas home builders design their homes with women in mind: in some of their developments, more than 50% of buyers are single women.

Thank you for reading,
and let me know if I can help you with any real estate questions.

Friday, May 11, 2018

For all buyers trying to get in contract right now, the same question is on everyone's mind: what are interest rates today, and how much is my loan payment going to be after my offer is accepted?

This informational slide below, compliments of the California Association of Realtors, gives us a pretty good idea on the impact of any change in the rates:

Also, here is a good link for current mortgage rates, to keep abreast of interest rates in general.

Tip: unless you are a gambler, it is usually a good idea to lock the rate the moment you are in contract to purchase a home.
Should 30-yr fixed rates increase too much on you, and you cannot qualify for the same amount any longer, you may have to consider a loan that would be fixed for a few years, and which then becomes adjustable. These are the "3-yr, or 5-yr, or 7-yr fixed then adjustable" loans. The starting rate, on which you are qualified by the lender, is lower, and that in turn allows you to qualify for a larger loan amount. Ask your lender to advise you on the matter.

Monday, April 30, 2018

Since disclosures are one of the most important topics to address for sellers who sell their home, this is a subject certainly worth talking about. A good rule of thumb is typically: if you wonder if you have to disclose something about your property, usually the answer is a resounding "YES".

With this in mind, I found this article from the Law Offices of Peter Brewer most interesting. It details a few (rare) items that sellers do not have to disclose.
Arguably, the fact that one does not have to disclose does not necessarily mean they should not disclose, and in all cases it is always advisable to ask a qualified California Licensed Real Estate Attorney whether to disclose a specific item if you really are wondering about it - if you sell in California.

Although Realtors cannot advise on legal matters, they will usually tell you that it is best to disclose if you are in doubt (with a few exceptions) - and this is where the above article, written by attorneys, comes in as most interesting.

Most real estate lawsuits stem from sellers' or agents' disclosures or I should say: "lack of disclosures".

Marketing your property is certainly a very important aspect of selling a property, but working on preparing good disclosures when you sell your home is in my opinion by far the most important thing to do, and the wrong guidance on this matter could cost you a lot. I think it is the most important criterion in choosing your Realtor to sell your California property.

Friday, April 6, 2018

I was really surprised to read this article in the Realtor Magazine (National Association of Realtors) about the number of people making offers without seeing the property first.
The source of the article is a survey of more than 1,500 home purchasers by the real estate company Redfin.

The figures are, I think, somewhat staggering:
in June of 2016, 19% of purchasers made an offer sight-unseen,
in May of 2017, it was 33%, and
in November/December of 2017, it was up to 35%.

It has happened to me to have a client make a purchase "long distance", so I understand the circumstances under which it can happen, but this number still surprises me. I guess with the market going up so much, and properties selling so fast (especially in the Silicon Valley), one can see how some home buyers may have to cut some corners.

Saturday, March 17, 2018

From our specialists at
Cornerstone Title, the Title Insurance branch of Coldwell Banker, here are some
pointers for buyers and real estate owners in California. (adapted from an
article by Audrey Ference on Realtor.com).

A deed is a legal
document used to confirm or convey the ownership rights to real property.
It must be a physical document signed by the seller/ grantor.

Title, however, is a legal way of saying you have ownership of real property.
Title is not a document, but a concept that says you have the rights to that
property.

So when you buy a property, you will receive the deed, a document that
proves you own it. That deed is an official document that shows that title
to the real property has been conveyed to you as the grantee.

How to get the deed and take title of a property?

To get the deed and "take title," or legally own the property, your
title company will perform a title search. This ensures that the
seller has the legal right to transfer ownership of the property to you,
and that there are no liens against it. If everything is clear, then at closing
the seller will transfer the title to you, and you become the legal
owner of the property.

In California, the title company will ensure the deed is recorded at the county
recorder’s office or courthouse, depending on where you live. You'll generally
get a notification a few weeks after closing escrow, that your deed has been
recorded. At that point, you have the deed and title to the real estate
and the property is all yours.

What is title insurance?

Even with all of the due diligence a title company does before closing, there
can be rare instances when title problems can pop up later (e.g., missed liens
and other legal issues that can be very costly to resolve). To protect against
any financial loss, two types of title insurance exist: owner's title
insurance and lender's title insurance.

Unlike other types of insurance that protect the policyholder from events that
may happen in the future, an owner’s title policy protects the buyer from
events that have happened in the past that may jeopardize your financial
interest, such as title defects, fraud, and unpaid liens against the property,
or claims that someone else is the real, legal property owner. On the other hand, when you secure a
mortgage, your lender or bank will require that you purchase lender's title
insurance to protect the lender in case any title problems arise.
Lender's title insurance protects the lender's interest in your property
until the loan has been paid off.

Thursday, February 1, 2018

The California Association of REALTORS® (C.A.R.) is
embarking on an historic effort to increase homeownership opportunities. C.A.R.
is going to qualify an initiative - the Property
Tax Fairness Initiative - for the November 2018 ballot which
will allow senior homeowners (55 years of age and older) among others to keep
all or most of their Proposition 13 property tax savings when they move.

I think this is important, because seniors, who are often on a fixed income,
fear they will not be able to afford a big property tax increase if they sell
their existing home and buy another one, discouraging them from ever moving. As
a result of this “moving penalty” almost three-quarters of homeowners 55 and
older haven’t moved since 2000. C.A.R.’s portability initiative would allow
senior homeowners to transfer their property tax base from their current
residence to a replacement residence located anywhere in California.

The measure, if approved by voters, will let thousands of
seniors, currently “locked into” their homes by low property tax rates purchase
a home that will better suit their needs while expanding the housing inventory
for young families seeking to buy a home. According to the
California Legislative Analyst's Office, tens of thousands additional
homeownership opportunities will occur annually.

The initiative would remove the “moving penalty” for seniors
55 and older, and also for the disabled and victims of natural disasters,
allowing them to carry their current Proposition 13-protected property tax
assessment level to another home of any price, anywhere in the state, any
number of times.

Let me know if you are interested in more information on
this subject or if you would like to sign a petition to place this initiative
on the November ballot.